An extremist, not a fanatic

April 12, 2009

Marx's important error

Marx only ever produced one tantalising, beautiful and daft line on what working life would be like under communism. In the concluding volume of Das Kapital, Marx remarked that the average man in a communist society would be able to go fishing in the morning, work in a factory in the afternoon and read Plato in the evening — an implausibly high-minded combination of activities that tells us rather more about Marx than it does about the average man.

I don’t recall such a passage in volume III. It would be out of keeping with a pretty dry analysis of rent, interest rates and the tendency of the rate of profit to fall. And a search of the book in the brilliant Library of Economics and Liberty draws a blank.However, there is this passage in the The German Ideology, written some 30 years before vol III:

In communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.

I suspect this is what de Botton had in mind. Which raises a question. De Botton would not think such misattribution acceptable in a reference to other important writers. So why is it acceptable to be so sloppy when one is writing about Marx? Why does partisanship allow one to abandon minimal standards of scholarship? (As a rule of thumb, any non-German who refers to “Das Kapital” hasn‘t read it.) What’s more, Marx wasn’t entirely daft. He was presaging a point made 85 years later by Keynes, in his essay (pdf), Economic Possibilities for our Grandchildren. In this, he predicted - just as Marx did - that productivity would grow sufficiently to allow our needs to be met with very little labour:

For the first time since his creation man will be faced with his real, his permanent problem - how to use his freedom form pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.

Marx thought that living wisely and well would consist in working voluntarily, cultivating mind, body and garden. This, though, raises a question. Why is it that the rise in productivity hasn’t had the effects predicted by Marx and Keynes? Why have our “needs” risen as our productive powers have, with the result that the hours we devote to employment haven’t fallen as much as Marx or Keynes forecast? Why is it that so many of us - I count myself fortunate to be a partial exception - haven’t used wealth to free ourselves from alienating labour?Yes, Marx was wrong, as was Keynes. But their error raises a deep question, which Marx’s illiterate critics have not sufficiently appreciated.

"Why is it that the rise in productivity hasn’t had the effects predicted by Marx and Keynes?"

Well, I'd suggest (and I'm no economist so I may have overlooked something big) that the rise in productivity won't make the average person 'richer' because the products are owned by capitalists, and so people always have to work, not because there aren't enough goods but because unless they can make a profit for capitalists, they are legally barred from enjoying them.

Is Tim Worstall's comment a celebration of the 30-year Thatcher anniversary? It's certainly nothing to do with reality.

As George Akerlof writes, "If higher unemployment results from workers' rejection of the poor returns from work, quits [ie people quitting work] should rise along with unemployment. But there are fewer quits, not more, when unemployment rises."

I think the answer to this "why" is that we moved away from an economy of "just goods" to an economy of "goods and services".

Productivity is tied to technology, that grows quadratic, as population. That makes production/comsumption somehow balanced and, with this observation only, one should think that needs will be satisfied.

Our ability to provide services is (still) linear, while demand is growing quadratic (by population), so we need to work these wild hours.

It's interesting that people that is in production of goods have low wage jobs (at least in Argentina, where i live), but also have standard working hours.

Reality seems to have not changed, we just moved the need to something different, and we will do it again once everything is "conquered" in services productivity...

"Why is it that the rise in productivity hasn’t had the effects predicted by Marx and Keynes?"

I am told that in Marx's day the typical working week in Britain and Germany was 60-80 hours. Now it is 30-40 hours. There are a lot more holidays, too. The age at which people start work has gone up by 5-10 years, and most people have a decade or two of retirement. Quite apart from the people Tim Worstell referred to.

So I would say that rising productivity has reduced the "hours of labour" people put in. It just has not reduced them quite enough to perfectly cancel out the productivity increase. Presumably this is because there are more things to buy - TVs, cars, holidays in the Far East etc.

To answer your question on why have our hours of work not fallen as productivity rises - isn't it obvious? It's because we like work: or, as the poet and writer Frederick Turner puts it more eloquently in his book 'Shakespeare's 21st Century Economics', we like being engaged in the marketplace where we create value and have value in the eyes of other participants. It's a fundamental part of being human in a community of other humans.

This is one reason why the experience of unemployment is so miserable: not for the material deprivation (so much, these days) as for the pain of being cut off from the interaction with others in the market's ongoing dance of creation and transformation.

Because the "leisure time" is concentrated among the minority, those that are unemployed or on incapacity benefit. Why should this be? Becasue we have an inefficient labour market, which is prevented from clearing by government interference:
- setting a NATIONAL minimum wage that prices the least able out of the market
- setting welfare benefits whose withdrawal produces a massively high marginal rate of taxation
- constructing a NI system that fails to include an allowance, so disincentivising employers from employing three people at 40 hours a week rather than two at 60 hours
- imposing labour laws that make it difficult to sack someone when necessary, thus discouraging their employment in the first place

Ad - it's certainly true that working hours have fallen in the last 100 years. But they haven't fallen as far as Keynes' forecast - to 15 hours a week.
I can't believe the difference between his forecast and reality is all due to people spending longer in retirement and studenthood.
Gerard - is it really correct to infer from the fact that the unemployed are unhappy that employment makes us happy. Could it be instead that it's work, or a sense of achievement and being valued, that makes people happy, and a lot of people can only find these through capitalist mployment?

Robert Frank would seem to offer one answer in "Falling Behind: How Income Inequality Harms the Middle Class". Loosely, we're all 'keeping up with the Joneses' - the consumption of others leads us to want to consume more and a society-wide collective action problem means that we have great difficulty escaping this problem.

There do appear to be cross-national differences, though. The French seem to have escaped it more successfully than the Americans, for example. August in Paris is a testament to this (so people say).

Think Huxley's Brave New World. The masses need to be controlled in leisure time with things that prevent outrage or revolt or intelligent thinking. The class system is preserved by the those at the top. This functions on the basis of envy and admiration. This translates into economies as possessions and advertising the unaffordable (Business Class eg). The "needs" escalate creating more labour for more people, the people aim not to do manual labour. The role of the white collar worker is "reinvented" to maintain a steady stream of middle classes the lower classes can aspire to. The obvious reinvention is bureacracy. Police officers no longer write reports, they have white collar civil servants to do it. None of the middle classes can elevate themselves to upper classes therefore the cycle perpeuates and we abrdge it all with technology; spare time in different formats. Rather like blogging is the new cafe culture. Ahem.

"Why is it that so many of us - I count myself fortunate to be a partial exception - haven’t used wealth to free ourselves from alienating labour?"

The fear of poverty, at least for those who have a comfortable standard of living. We don't know how long we will live and so find it hard let go knowing that once we leave the work place returning is very difficult.

"Many have, to the annoyance of many others. Some call those who have benefit scroungers."

Indeed. Ever since I went on the dole I've been heartily enjoying my £41/a week and the subsequent feelings of shame, inadequacy, crippling lack of confidence and general debilitating self-disgust that come with it.

@chris

"Could it be instead that it's work, or a sense of achievement and being valued, that makes people happy, and a lot of people can only find these through capitalist mployment?"

Well I guess I could volunteer at the local Oxfam shop or dedicate myself to Great Works of Art or Technical Brilliance. Or indeed cultivate the Art of Life itself as Mr Keynes suggests.

Gerard O'Neill: Amen. A good argument and one which I recognise both in myself and in others around me.

David Boycott: I can't speak to the first two points (minimum wage and high marginal taxation rate from withdrawal of benefits). But on your latter two:
- I employ people and last time I checked the NI calculations (which was last week) there is definitely an NI allowance, which is about the same as the income tax allowance. Indeed your example is a perfect one from my point of view: my behavioural programming team employs three people at 40 hours and not two at 60 hours, so I guess the incentives are not as screwed up as you fear.
- The thing that stops me firing people (if I wanted to) is certainly not government regulation, which is pretty relaxed in this country. It's the skills of the people I have (human capital invested) and the risk of impact on morale if I did let anyone go. As far as I can tell, those are not correlated with government regulation at all but are basic effects of people working together and developing specialisation.

Chris: Well done, it looks like you've hit the Raivo Pommer threshold. A special moment for any blog.

As a kid I used to watch Tomorrow's World on the BBC. It promised a future of labour saving devices, many of which are now with us, yet we seem to work longer hours and are no happy for it. In other words the new technological dawn hasn't worked for the majority of people and I suspect that this is a question of the ownership and control of those technologies.

Thanks Leigh. Perhaps the problem with NI then is it topping out - at is it 40k or so? - which naturally makes it more efficient to employ fewer people and pay them more than more people and pay them rather less.

Clearly, there are lots of reasons to avoid cutting a workforce, but there is no reason that government should add to them. Reallocation of labour is an intrinsic part of any downturn - government should be concerned with encouraging the creation of new jobs, not preserving jobs in zombie industries.

For me a state of affairs has occurred that has allowed me to retire at 44. But it required me to save a lot of my income. To not spend it on things but invest it and use it to maintain my freedom, the most precious gift of all.

Keynes was not predicting a rosy future in this essay. His point was that when society attained technological ability to satisfy our basic human needs - solve the "economic problem" - we would be faced with a profound moral dilemma. How would we shed our acquisitive nature? How would we fill the surplus hours that technology would give us? Keynes was pessimistic - he did not have much faith that most people would easily transition to a lifestyle devoted to higher pursuits. I think that what has actually happened is in the range of outcomes that Keynes foresaw - that rather than cutting back on work and spending our leisure time in spiritually fulfilling ways, we have clung to old habits and ways of thinking, and as a consequence are a neurotic mess. I imagine he would say that Europe has done a better job of managing the transition to abundance than we in the US and UK have.

"I can't believe the difference between his forecast and reality is all due to people spending longer in retirement and studenthood."

Chris - Nor can I:

"It just has not reduced them quite enough to perfectly cancel out the productivity increase. Presumably this is because there are more things to buy - TVs, cars, holidays in the Far East etc."

All else being equal, the more things or services you want to buy, the more you have to work in order to be able to buy them.

There is nothing really new about that.

Think of all those Victorians who worked 80-hour weeks not to keep body and soul together, but to keep a carriage and go grouse shooting. Now think of all those people today who work 40-hour weeks not to keep body and soul together, but to keep a car and go to Spain every year.

Wake up bimbo!, under capitalism gains in productivity are largely distributed to the owners of capital making workers redundant, invading everyone with the fear of unemployment. Is it any wonder we work and remain increasingly insecure in a system with such built in instability and exploitation of labor?

Don't know about Marx, but I have never understood why Keynes didn't realise that while the price of cars may drop, the price of the sort of cultural goods that he valued, like, e.g. piano lessons for your children, has gone up.

Conflating Marx with Keynes was absurd.
Marx was talking about a post-capitalist world, where communism had been realised, where each and every "worker" had achieved class-consciousness, where the state had withered away.
Like all sci-fi fantasies, it was of it's time, hugely limited by the ability of it's author to imagine what man's future wants / needs might be.
Marx spent most of his life in poverty, so satisfying basic needs - food, shelter, warmth, health... - probably limited his ability to grasp how the rich lived, how their wants differed, how they took for granted luxuries that most knew nothing of.
Most of us, even the relatively poor, live in a world more akin to the 19th C rich than the poverty Marx lived, albeit that we worked to afford our houses, cars, fridges, central-heating, etc.

The biggest reason, IMO, is the increasing amount of mandated auxiliary consumption to support a unit of primary consumption. As Paul Goodman described it, there are commonly 300% or 400% markups to make or do anything. This is "the realm of cost-plus." Government mandates minimum overhead levels on small manufacturers and microproducers in the informal and household economy. The majority of commodity price consists of rents on artificial property rights like IP, rather than actual labor and materials. The economy is awash with crystalized waste labor, from buffer stocks in factories to landfills full of stuff designed to fall apart. Because of subsidies to sprawl and zoning restrictions on mixed-use development, we each have two cities: one, a bedroom community where we are warehoused, and another where we shop and work--each with its own independent power and road infrastructure, and linked together by a commute. When you hire a plumber, you typically pay 250% of what he actually gets as a wage; the rest goes to bureaucratic overhead that wouldn't exist if you dealt with him directly.

The issue of women working is fascinating. 50 years a family in the UK could be maintained on one wage. Now most people reckon it takes two. Has women's increased presence in the formal labour market decreased wages, or have decreased wages pulled second earners from the family into the marketplace? Are our children being damaged by employers' demands that labour is cheap? Are we all being exploited because the benefits of modern advances seem not to have flowed into the wage packet?

Undoubtedly on average a family's material resources are greater. How much of that is due to the changes foreseen by Marx and Keynes? Are we over or under?

[Yes, I know many modern families are fractured. But also, many single parents find a new partner quickly -- is this an economic imperative rather than a social one?]

Teh charge of illiteracy against someone who hasn't read all of Marx is like a charge of illiteracy against someone who hasnt read some medieval scholastics but still rejects Christiantiy. All those of us who have brains have to do is understand just how fundamentally wrong Marx was about everything else - the immiseration of the Proletariat causing a workers revolution where the State takes everything and everyone is now rich, there is no money. The State magically disappears, and Jesus comes on a cloud. Well not that last bit. And lots more. Labour theory of value my ass.

The answer to the question is because the State employs ( or pays off) the surplus population. Imagine a State of 100 people who worked in a number of widget factories making 1000 widgets a year. That is 10 each, on average. They sell to each other

Now fast forward 100 years. The factories are more productive and make 10 times as many widgets with half the population ( because of Market competition by the way) So either we have 50% unemployed, or we tax the 50 workers and factories to employ the rest. Not all of the 50 would be unemployed. Even within the factories there are probably useless bureaucratic jobs - non-producers - and the increase in wealth allows self-employed roles to increase - like fitness etc.

But basically the State makes private sector workers work longer. To pay for the State.

I would have thought Marx's analysis in Capital answers that question and SS did too - the product of labour is expropriated by the owners of capital. And Marx in the German Ideology was talking about a society in which the profit system had been overthrown.

de Botton is quoted above as saying: "Marx remarked that the average man in a communist society would be able to go fishing in the morning, work in a factory in the afternoon and read Plato in the evening — an implausibly high-minded combination of activities that tells us rather more about Marx than it does about the average man."

Whatever it tells us about Marx, it also tells a far bit about the high (ie in the flatulent sense) mind of de Botton. Plenty of sons and daughters of working people get to read Plato, philosophy, mathematics, science and the rest. Ergo many of their parents had the potential to at least do the same.
The great Isaac Newton was the son of an illiterate ploughman.